‘Pure’ RE firms valued more by investors

MANILA  -The growing interest in nonconventional sources of energy will further drive the aggressive renewable energy (RE) push in the Philippines, according to the Institute for Energy Economics and Financial Analysis (IEEFA).

In fact, the country’s renewable space “has seen enhanced interest and notable growth” in the last two years, according to the think tank’s latest report entitled Business Model Innovations Drive The Philippines’ Energy Transition.

“New and incumbent players with track records in infrastructure and utilities have begun to accelerate investments in renewable energy,” it said.

The think tank said the emergence of RE developers and operators such as ACEN Corp., Citicore Energy REIT Corp and Solar Philippines is a “standout feature” in the acceleration of RE adoption in the Philippines.

“In terms of how investors view asset values, pure play renewables companies command a valuation premium over utilities having lower levels of renewables in their mix,” said Ramnath Iyer, report author and IEEFA’s Climate and Renewable Energy Finance Lead, Asia.

Companies rewarded

The IEEFA noted that investors are willing to reward firms that have plans to expand their footprint in the sector and managed to carry out their plans.

For example, investors value each megawatt of installed capacity at ACEN at $2.46 million (P137 million) based on the market capitalization and megawatts in operation as of Aug. 4 this year and CREIT at $1.83 million (P102 million) per MW.

On the other hand, First Gen Corp. and Aboitiz Power Corp., with thermal and RE in their portfolios, are valued at only $479,000 (P26.7 million) per MW and $1.32 million (P73.7 million) per MW, respectively.

“Valuation premiums for pure play renewables companies —as seen in their higher price-to-book ratios, stronger market valuation of installed capacity, and stock performance over the past five years—suggest that this focus on renewables as a concentrated strategy has paid off,” Iyer said in the report.

The IEEFA also said among the industry’s key players, ACEN and Solar Philippines have grown significantly. INQ